The impact of the Sarbanes-Oxley Act on corporate financial reporting
Introduction
In this day and age, we are living in a highly developing world, and with the development many problems have come out to us, especially the economic issue. Finance plays an important role in our daily lives, and most things need currency to transact. Hence, it is easier to trigger a problem of people, company or market. There is a company, Enron Corporation, which was one of the world’s top energy companies. However, because of corruption and fraud, the company had to go into bankruptcy (Vakkur & Herrera-Vakkur 2012). This incident not only led to related corporations paying the huge cost, but also had a strong impact on the American and British governments. In order to avert another mistake, the government would set up many acts to perfect management systems. There is an act which was promulgated in 2002 after the Enron event, the Sarbanes-Oxley Act, which is mainly about strengthening the supervision of internal accounting of enterprises, compulsory external audits, and increasing punishment levels for criminal fraud (Hoyle, Schaefer, & Doupnik, 2011). This act is one of the most far-reaching pieces of American reform. In the meantime, it also makes a great impact on corporation financial reporting.